Already the corridors of the central finance ministry must be abuzz with preparations for the 2006-07 Budget.
During the daily brainstorming sessions between the finance minister and the senior officials, and among the latter themselves, all kinds of ideas must be getting a once-over, and either noted down for further examination or shot down on the spot.
The Council of Economic Advisers, the Planning Commission and the various ministries too will pitch in with their own proposals.
Think tanks, media, civil society groups, and federations of industry, business and commerce must have happily got cracking on the contours of the coming Budget and geared themselves for the hardy annual of interactive sessions with the finance minister.
The Budget is a fair game for foreign know-alls as well those who would be coming up with their instant fixes on the dictum that the same size fits all!
Critical mass
Over the years, Budget-making has followed a standardised routine: extrapolate a few figures under various categories of taxes and duties, notch up the outlays under various heads, throw in a few grandiloquent schemes with fancy (and preferably unpronounceable Hindi) titles, pay mandatory obeisance to poverty eradication, rural development, agriculture and full employment, tote up the totals, work out the deficits, and serve with a few quotes from poems, digs at the Opposition and forays at supposed humour.
With a buoyant economy and a spirit of confidence and optimism in the air, having recourse to the above conventional approach in framing the Budget for 2006-07 would be the easiest part of the task before the finance minister.
But there are some special features of the economic landscape that make a reality check necessary. The United Progressive Alliance coalition is exactly midway in its term, with the economy reaching a critical mass. This is just the juncture at which it becomes imperative to chart the future course with a clear-eyed SWOT (strengths, weaknesses, opportunities and threats) analysis.
In short, it is a time for stocktaking and mid-course correction.
There are some rays of hope, though. The present brains trust of Prime Minister Manmohan Singh, Finance Minister P Chidambaram, Planning Commission vice chairman Montek Singh Ahluwalia, Commerce Minister Kamal Nath and Reserve Bank Governor Y V Reddy, ably assisted by the supporting cast comprising the likes of Dr C Rangarajan, V Krishnamurthy and Jairam Ramesh have been showing themselves adept in performing a balancing act amidst all the pulls and pressures and shoring up the gains so far made nationally and internationally, while still maintaining a well-calibrated pace towards the ultimate objective of making India assume the status of an economic giant and a global power in all respects.
The vigorous steps being taken in West Bengal under the forward-looking leadership of the Chief Minister Buddhadeb Bhattacharjee, as well as his outspoken chidings of the CPI (M)'s party cadres whenever they hark back to the days of gheraos, labour intransigence, obstruction and intimidation of captains of business and industry, are indicative of the Left also being in tune with the spirit of the times.
The problem arises only when one does not make allowances for their susceptibilities, makes light of their insistence on reforms with a human face, job-led growth and safeguards against economic imperialism under another name, and unfairly doubts their genuine concern for national interest when they advocate caution.
Black holes
Most often, the discord between the Left and the ruling coalition is the result of inept political management and abrupt announcements of fait accompli without prior consultation.
Since the Left has been in consonance with the approach and strategy adopted in West Bengal, making the state's chief minister a permanent invitee to the meetings of UPA-Left Coordination Committee and profiting from his advice may work wonders in forging a consensus on all the elements of the new economy and accelerating the progress of implementation of the reforms.
Apart from these factors, run-of-the-mill budgets with more of the same have been having a number of black holes, which had resulted in a chronically persisting and cumulatively widening gulf between outlays and outcomes, announcements and accomplishments, and expectations and entitlements.
The first such black hole is poor project management resulting in unconscionable cost-cum-time overruns, investments going without return and people robbed of the intended benefits.
The second black hole is the scant attention paid to the sustained operation and maintenance of projects already completed.
Maintenance is at its worst in precisely those sectors -- utilities and infrastructure -- where it needs to be at its best. In respect of power stations, for instance, by doubling the plant load factor and reducing transmission and distribution losses to half their present level will likewise be the equivalent of installing an additional 50,000 megawatts of generation capacity without spending a single rupee and the multiplier effect of this one sectoral component alone functioning at its optimum efficiency will mean notching up the GDP by two more percentage points.
Adding to GDP at no extra cost
In sum, the finance minister will do well to devote 2006-07 to the improvement and consolidation of the outcome of the initiatives and schemes already taken up and the restoration of the fiscal health in the overall, instead of including any new or ambitious programmes or going in for any extensive revamping of the tax regime.
The Budget would, in this sense, be a minimalist one, almost a mirror reflection of its predecessor, allowing the finance minister and his colleagues in the UPA government to bend their energies wholly to get the maximum bang for minimum buck, and thereby add four or five more percentiles to the GDP at little or no cost. The fiscal deficit too will dive south once productive assets yield commensurate return, and the leaks are plugged.
The upbeat state of the economy, the prevailing price stability of essential commodities and low inflation give breathing space to all the economic players to have a go at economic management as a holistic exercise, instead of boxing themselves within the confines of a stereotypical Budget.
B S Raghavan was formerly director (political) in the ministry of home affairs.
